OPER 360 Final Paper 
Ngoc Nguyen
OPER 360-02
Professor Quinn
Final Paper
06.04.2014
Costco Costco has been known as an international chain of membership warehouse, which carries quality, brand name products at lower prices than other wholesale or retail sources. Costco is truly a global business with a total of 655 warehouses worldwide. In 43 different US States, Costco has at least one warehouse. Not only in the America, but Costco’s area of operation also spread out to the Asia and Europe. When deciding to go globalize, Costco chose the global-centralized out of the four options. Costco is flexible in choosing the kind of product to sell in different country, so that those products can meet the right demand of the customers from that particular country. Going global is a big decision, so Costco must take close observations into many different countries and those markets before deciding the best country operate its business. Location is considered as one of the crucial factors that lead to a business’s success. The business should consider any tangible or intangible costs, political or climate risks, and the proximity to suppliers. There are four methods to choose a location: factor rating, location break-even analysis, center of gravity, and transportation model. In this case, I feel like Costco has applied the center of gravity method, which means finding a location of the single distribution center serving several destinations. Costco is operating as a warehouse or retailer, so it definitely wants to find the location that is near to households and other types of businesses. In that way, it can act as the main source of distribution to other businesses. Besides carrying variety kinds of products, Costco also has great services in different areas. Some of them are auto program, health and dental plans, payroll services, boat and RV loans, mortgage purchase and refinancing, etc. These services are very benefiting for customers’ daily life. With the hope of keep growing and
OPER 360-02
Professor Quinn
Final Paper
06.04.2014
Costco Costco has been known as an international chain of membership warehouse, which carries quality, brand name products at lower prices than other wholesale or retail sources. Costco is truly a global business with a total of 655 warehouses worldwide. In 43 different US States, Costco has at least one warehouse. Not only in the America, but Costco’s area of operation also spread out to the Asia and Europe. When deciding to go globalize, Costco chose the global-centralized out of the four options. Costco is flexible in choosing the kind of product to sell in different country, so that those products can meet the right demand of the customers from that particular country. Going global is a big decision, so Costco must take close observations into many different countries and those markets before deciding the best country operate its business. Location is considered as one of the crucial factors that lead to a business’s success. The business should consider any tangible or intangible costs, political or climate risks, and the proximity to suppliers. There are four methods to choose a location: factor rating, location break-even analysis, center of gravity, and transportation model. In this case, I feel like Costco has applied the center of gravity method, which means finding a location of the single distribution center serving several destinations. Costco is operating as a warehouse or retailer, so it definitely wants to find the location that is near to households and other types of businesses. In that way, it can act as the main source of distribution to other businesses. Besides carrying variety kinds of products, Costco also has great services in different areas. Some of them are auto program, health and dental plans, payroll services, boat and RV loans, mortgage purchase and refinancing, etc. These services are very benefiting for customers’ daily life. With the hope of keep growing and